Tokyo – Q4/2021
MARKETINMINUTES
Savills Research

Office Leasing

Savills team
Please contact
us for further
information
JAPAN
Christian Mancini
CEO, Asia Pacific(Ex Greater China)+81 3 6777 5150
cmancini@savills.co.jp

RESEARCH
Tetsuya Kaneko
Managing Director,
Head of Research &Consultancy, Japan+81 3 6777 5192
tkaneko@savills.co.jp

Rates of rental decline slow
Traditional offices still have an important role to play, although the hybrid
working model continues to proliferate across multiple industries.
• W hile the pandemic has calmed down significantly, theprolonged lukewarm market sentiment has continued to
impact office rents and vacancy in the central five wards(C5W).

• Tenant preferences for easily accessible, larger, and newer
offices persist, and some companies are changing their officelayouts to support a hybrid working model.

• Average Grade A office market rents in the C5W fell 2.0%
quarter-on-quarter (QoQ) and 7.6% year-on-year (YoY), andnow stand at JPY33,681 per tsubo1 per month.

“The office remains animportant part of the work
environment, and newer
offices in good locations arestill highly sought after. Whilethe hybrid working model has
proliferated across multiple
industries, most companies
intend to gradually increase
their in-office attendanceas long as the state of thepandemic stays manageable.”• The average Grade A office vacancy rate in the C5W
increased by 0.3 percentage points (ppts) QoQ and 1.8ppts
YoY to 2.8% in Q4/2021.
• Average large-scale Grade B office rents declined to
JPY25,532 per tsubo per month – a contraction of 2.2% QoQ
and 8.4% YoY.
• The average vacancy rate in the Grade B market loosened
0.3ppts QoQ and 1.9ppts YoY to 3.6%.
• With the pandemic in a manageable state and highvaccination rates, companies are considering gradually
increasing office attendance while maintaining some level ofremote work.
1 1 tsubo = 3.306 sq m or 35.583 sq ft.

savills.co.jp/insight-and-opinion/

SAVILLS RESEARCH & CONSULTANCY

1

Yoshihiro Kanno
Manager, Research &Consultancy, Japan+81 3 6777 5275
ykanno@savills.co.jp
Simon Smith
Regional Head of
Research & Consultancy
Asia Pacific+852 2842 4573
ssmith@savills.com.hk
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Office Leasing

GRAPH 1: Office Rents and Vacancy in Tokyo’s C5W*,
2011 to Q4/2021
Average Grade B Vacancy
Average Grade B Rent (LHS)
16%
14%
12%

25,00010%

20,0008%

15,000

6%

10,000

4%

5,000

2%

0

0%
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3

35,00030,000VACANCY RATE

RENT (JPY / TSUBO / MONTH)

Average Grade A Vacancy
Average Grade A Rent (LHS)
40,000

11

12

13

14

15

16

17

18

19 20 21

Source Savills Research & Consultancy*Chiyoda, Chuo, Minato, Shibuya, and Shinjuku

GRAPH 2: Grade A Office Rental Index by Ward,2011 to Q4/2021
ChiyodaShinjuku

Chuo
ShibuyaMinatoAverage210

Q1/2012 = 100

190
170
150
130
110

Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3

90
11

12

13

14

15

16

17

18

19

20

21

Source Savills Research & Consultancy

GRAPH 3: Grade A Office Vacancy by Ward,
Q2/2020 to Q4/2021
Q2/2020
Q2/2021

Q3/2020
Q3/2021

ChiyodaChuo

Q4/2020
Q4/2021

Q1/2021

6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
MinatoShinjuku

Shibuya

Source Savills Research & Consultancy

savills.co.jp/insight-and-opinion/

GRADE A OFFICES
Burdened by a bearish market sentiment andthe uncertainty surrounding new variants,
Tokyo’s Grade A market continued to soften
in Q4/2021. Specifically, rents contracted
by 2.0% QoQ and 7.6% YoY to JPY33,681 per
tsubo, and vacancy increased 0.3ppts QoQ
and 1.8ppts YoY to 2.8%. However, it should
be noted that rents contracted 2.2%, andvacancy increased 0.8ppts in the previous
quarter, showing that the rate of decline has
slowed.
At the submarket level, rental
contractions were the highest in Minato
and Shinjuku at 3.5% QoQ, while theother wards saw some minor decreases.
Looking at vacancy, Shibuya saw the
steepest increment of 0.7ppts QoQ, andChuo’s vacancy also loosened 0.5ppts QoQ.
However, the increments seen in otherwards were much smaller than those of
Q3/2021. In fact, Chiyoda even saw vacancy
decline 0.2ppts QoQ.
In Q4/2021, the impact from thepandemic appeared manageable, and there
were only a limited number of large-scalelease cancellations. A common trend inrecent movement announcements wasmoving to newer offices with good accessand larger floorplates. These offices are
better suited for supporting flexible work
arrangements, like having amenities suchas video conferencing booths on the same
floor and making free-address seating moreconvenient. Larger Grade A tenants are
more inclined to implement flexible working
schemes (Graph 4), and are usually the
subjects of such movements.
Overall, the demand for new buildings
appears sound. For instance, the latest
buildings to open in the C5W, Tokiwabashi
Tower and Hibiya Fort Tower, are almost
90% occupied. Pre-leasing of the next GradeA building to open in the C5W in July 2022,
Tokyu Fudosan’s Kudanminami-1-chome
project with over 11,000 tsubo of NRA,is also nearly completed. The project has
been well received due to its proximity
to Kudanshita station, its quick access to
the Otemachi and Marunouchi area, andits nationally famous spots for cherry
blossoms. Importantly, it also provides aneffective marketing and sales strategy. In
August 2022, Tokyo Midtown Yaesu will
also open with over 38,000 tsubo of NRA.
Looking ahead, 2023’s supply will dwarf
that of 2022 with multiple large-scale
developments coming to the market,
particularly in Minato. The supply opening
near large stations should perform well,such as the Sakuragaoka Redevelopment
next to Shibuya station, the TTM Projectthat is sandwiched between Tamachi station2and Mita station, and the Toranomon
Azabudai Project that has its own
infrastructure and amenities. However,the quick succession of high-specification
supply coming online in somewhat
inconvenient locations may be a challenge.
Nonetheless, the office market’s recovery
is still expected to be K-shaped, especiallyas secondary vacancy from last year’s large
supply continues to materialise in the Grade
A market. Indeed, while well-located andnewer offices remain stable, older offices
with poor accessibility are likely to continue
suffering and weigh down on the market
overall.
LARGE-SCALE GRADE B OFFICESThe Grade B market continued to loosely
mimic the performance of the Grade A
market in Q4/2021. Specifically, the market
experienced a rental decrease of 2.2%
QoQ and 8.4% YoY to JPY25,532 per tsubo.
Furthermore, vacancy increments weresimilar to what the Grade A market saw, witha loosening of 0.3ppts QoQ and 1.9ppts YoY
to 3.6%.
Shinjuku saw the largest rental decline in
the Grade B market, shrinking 3.1% QoQ,
while Minato and Chuo had the steepest
vacancy increments of 0.8ppts QoQ. Mostof this deterioration was from buildingsthat are located comparatively further fromstations and those built prior to 2000. On
the other hand, newer buildings with moreconvenient access are holding well. Indeed,
Shinjuku and Chiyoda have seen decreases
in vacancy this quarter. Elsewhere, Shibuya
saw the mildest contraction in rents,
decreasing 1.0% QoQ.
Looking ahead, most new Grade B
buildings in 2022 look set to perform well
given their proximity to stations, suchas Yanmar Tokyo which is located justoutside Tokyo station, and T-Lite which islocated next to Toranomon Hills station.
Additionally, the Grade B market should
stabilise before the Grade A market. Unlike
Grade A tenants, Grade B tenants do not
typically have the resources and capital to
implement firm-wide remote work and are
therefore more likely to keep their officespace. As seen in Graph 4, medium-sized
and small-sized companies have a lower
implementation rate of telework comparedto their larger counterparts. In addition,
Grade B offices generally have an easiertime filling office space given the muchlarger potential tenant pool of the Grade B
market and the greater flexibility of dividing
up floor plates in Grade B buildings. For
additional details, please see our [Tokyo
Grade B Office] report.

Office Leasing

GRAPH 4: Telework Implementation Status per Sizeof Company, November 2021
Performing Telework
NOT Performing Telework

Plan to Perform Telework

SIZE OF COMPANY

Over 300 Staff

86.7

Between 100 &300 Staff

8.0 5.3

62.1

Less than
100 Staff

17.9

46.3

21.3

0

20.0

32.4

50

100

SHARE OF COMPANIES (N = 414)
Source Tokyo Metropolitan Government,
Savills Research & Consultancy

TABLE 1: Comparison of Submarkets’ Grade A Rents
as of Q4/2021 - QoQ, YoY, and Since the Pandemic
Began in Q1/2020
SUBMARKETRENT(IN JPY)

QOQ

YOY

SINCE THEPANDEMIC

Chiyoda41,000

-1.4%

-5.1%

-6.2%

Chuo

32,500

-0.8%

-6.8%

-8.7%

Minato31,200

-3.5%

-8.4%

-9.7%

Shinjuku

27,900-3.5%-14.3%-18.7%

Shibuya

35,700

-1.3%

-4.8%

-11.9%Overall

33,700

-2.0%

-7.6%

-10.8%

Source Savills Research & Consultancy

TABLE 2: Comparison of Submarkets’ Grade A
Vacancy as of Q4/2021 - QoQ, YoY, and Since thePandemic Began in Q1/2020
SUBMARKET VACANCYQOQ(PPTS)

YOY(PPTS)

SINCE THEPANDEMIC(PPTS)

Chiyoda

1.6%

-0.2

0.8

0.8

Chuo

2.6%

0.5

2.2

2.6

Minato

5.5%

0.3

3.8

5.3

Shinjuku

2.5%

0.4

2.1

2.5

Shibuya

1.8%

0.7

0.3

1.6

Overall

2.8%

0.3

1.8

2.6

Source Savills Research & Consultancy

savills.co.jp/insight-and-opinion/

GRADE A RENTS AND VACANCYRATES BY WARD
ChiyodaChiyoda’s vacancy levels have declined
0.2ppts QoQ to 1.6% and are currently thelowest in the C5W. Meanwhile, rents saw acontraction of 1.4% QoQ and 5.6% YoY to
JPY41,000 per tsubo. The rental contraction
this quarter in Chiyoda was slightly milder
than the overall decrease seen in the C5W.
As such, Chiyoda’s premium in rent over theGrade A market’s average has grown to 22%,up from 19% at the start of 2021.
On the ground level, Chiyoda has only
seen a limited number of lease cancellations
and movements out of the ward. In fact,
Tokiwabashi Tower, which opened in June,
will become fully occupied after seeing
multiple new leases totalling 3,000 tsubo,
led by the trading firm Nagase which willlease 2,300 tsubo. In combination withother smaller moves into other various
Grade A buildings, Chiyoda’s vacancy looks toremain stable.
Looking forward, JSOL, a system integrator,
pre-leased over 2,200 tsubo in the next Grade
A office to open in Chiyoda, Tokyu Fudosan’s
Kudan-Minami Itchome Project, in July 2022.
This should also help to carry the pre-leasing
momentum of the building. The limited supply
after this building in 2022 should give therest of Chiyoda breathing room to continue
reducing vacancy across the ward. As such,
Chiyoda’s position as the premier ward in the
C5W should stay firm.
Chuo
Chuo saw a gentler rental contraction
this quarter of 0.8% QoQ and 6.8% YoY
to JPY32,500 per tsubo, down from thecontraction of 2.3% QoQ and 8.8% YoY in
Q3/2021. However, Chuo’s vacancy rate iscurrently the second highest in the C5W andcontinued to loosen 0.5ppts QoQ and 2.2ppts
YoY to 2.6% in Q4/2021. A closer analysis
reveals that most of this vacancy is situatedaround the Harumi and Kyobashi areas. If
vacancy continues to inch up, rental declines
may continue.
While the outer fringes of the ward
have generally been struggling during the
pandemic, some movements into this area
have been recently announced. For instance,
M3, a medical information provider, will
be taking a 1,300 tsubo lease in the Tokyo
Sumitomo Twin Building that is currently
undergoing renovations. In addition, KLL, afreight forwarder, will be leasing 500 tsubo in
Harumi Triton, a building that has recently
faced difficulties in finding tenants because its
location is far away from the main area of Chuo.
In 2022, Chuo will see one of the largest
additions to the Tokyo market, Tokyo
Midtown Yaesu. If priced reasonably, preleasing activity for this development should
be uneventful, given its prime location right3

next to Tokyo station and the recent positive
performance of newer buildings in the ward.
In 2023, some large redevelopment projects
will commence, and the demolishing of old
office buildings will create some demand
from tenants displaced in the process. Whencompleted, these projects will also feature
new amenities, and improve accessibility byintroducing a new bus terminal. Overall, whileouter submarkets have been weakened to someextent, the limited supply over the next coupleof years should give landlords time to deal withthe situation.
MinatoMinato’s rental contraction was one of thehighest in the C5W this quarter, decreasing
3.5% QoQ and 8.4% YoY to JPY31,200 per tsubo.
Furthermore, after loosening 0.3ppts QoQ and3.8ppts YoY to 5.5%, the vacancy in the ward is
the highest in the C5W. A major source of thisdecline came from older buildings as well asbuildings located in the bay area, as discussed
in our previous office briefing [Office Leasing
Tokyo - Q3/2021]. In addition, the new supply
in Minato and nearby wards has also createdsome secondary vacancy.
Fortunately for Minato, some buildingsthat saw major lease cancellations during
the pandemic appear to have acquired new
tenants. One such example is the Shiodome
Building where Ginsen, an insurance andreal estate company, will take a 1,500 tsubo
lease. Furthermore, BrainPad, a data analysis
company, will also take a lease in Roppongi
T-Cube, which Fuji Xerox vacated in late
2020. Elsewhere, TechMatrix, an IT solutions
company, will take a 1,500 tsubo lease in
Shinagawa Season Terrace as it consolidates
its offices around Tokyo into a central location
to support teleworking.
Many other buildings have also seen large
leasing activity. For instance, Akasaka K-Tower
has Mitsui Bussan I-Fashion, the fashion andtextile business arm of Mitsui & Co., taking a
2,000 tsubo lease. In addition, Pasona Groupdecided to lease the Avex Building in its entirety
after Avex sold the building to BentallGreenOak
earlier in 2021. Indeed, given the large supply
expected in 2023, the high level of leasing
activity from various industries is good news forthe ward, which hopes to carry the momentum
into the following year. In the meantime, 2022
will be a quiet year for supply, and should givethe market some time to recover and address
the worsening situation in some of the older andpoorly accessible buildings.
ShibuyaShibuya’s vacancy loosened by 0.7ppts QoQ
and 0.3ppts YoY. Meanwhile, rents contracted
by 1.3% QoQ and 4.8% YoY to JPY35,700
per tsubo. The main areas of Shibuya have
performed well, while most of the rental
contractions and vacancy increments thisOffice Leasing

quarter were from outer areas such as Ebisu, which
will be discussed further in detail in the next section.
On the other hand, there were some smaller
movements into the ward that should help maintainits stability. Furthermore, supply in Shibuya will belimited until 2023, which will provide the market
with some breathing room. The Sakuragaoka
Redevelopment, which will open in 2023, should
perform well given its excellent accessibility andits mixed-use nature, both of which are becoming
increasingly preferable attributes for tenants.
Shinjuku
Shinjuku’s rents contracted 3.5% QoQ and 14.3% YoY
to JPY27,900 per tsubo – a smaller decline comparedto the large 6.7% QoQ contraction seen in the lastquarter, although the drop was still the largest in the
C5W. Vacancy loosened 0.4ppts QoQ and 2.1ppts YoY
to 2.5%. The increasing vacancy in Shinjuku mainly
came from less accessible offices located further awayfrom major stations. Indeed, the situation of thesebuildings has worsened as more attractive buildings
with affordable rents open up in other wards.

Nonetheless, there have been some movements
into Shinjuku. For example, Japan Beverage, abeverage vending machine business, will take a 600
tsubo lease in Sumitomo Fudosan Shinjuku Grand
Tower. There are also rumours of other large tenant
movements that could alleviate the situation in
the ward. For now, rents are expected to continue
adjusting, particularly in Western Shinjuku. In
the short term, the limited supply should help themarket find an equilibrium pricing point. In thelong term, some large station-front redevelopmentsin the pipeline should help revitalise Shinjuku,
especially as foot traffic will also be expected to
improve in tandem.
DIVERGING PERFORMANCES INSHIBUYA
In 2013, Shibuya became the second most expensive
ward after Chiyoda. Since then, the ward has
established a premium of 14.5% over Chuo, which
has traditionally been in third place. In fact, until
Q1/2020, Shibuya was on pace to dethrone Chiyoda
as the most expensive ward, driven by airtightvacancy, a thriving tenant profile, and vibrantneighbourhoods. Indeed, this led to a copious
amount of investment geared towards making thearea around Shibuya station more attractive.
However, the pandemic has since deflated
this optimism. Shibuya’s previously flourishingtenant profile of IT companies were the first to
implement teleworking measures. Additionally,
the heightened rental levels deterred tenants thatwere previously priced out of the ward from reentering even as space started to open up. As such,
Shibuya experienced the sharpest rental decline
at the start of the pandemic and was the mostunderperforming ward until Shinjuku started
seeing more severe corrections recently.
However, while Shinjuku has continued to
weaken, Shibuya bucked the trend in 2021 andhad three quarters when vacancy decreased. In
contrast, all other wards have generally seen
increments. Indeed, Shibuya is overall an attractive
area, and corrections since the pandemic may havelowered rents closer to a price point that more

TABLE 3: Tenant Relocations, Q4/2021
ORIGIN
ChiyodaChuo

MinatoShibuya

Shinjuku

Other

9

13

18

5

3

15

4

3

1

1

1

5

3

14

1

1

1

3

1

9

Chiyoda

2

8

Chuo

4

23

Minato3

8Shibuya2

Shinjuku

13

Other

2
5

2

DESTINATION

6

Source Nikkei RE, Savills Research & Consultancy

TABLE 4: Notable Office Leasing Transactions, Q4/2021

COMPANY

BUSINESSSECTOR

TYPE

Pasona Group

Staffing

Relocation

Rakuten Group

E-Commerce

Expansion

NagaseChemicals
Trading

Relocation

JSOL

Systems
Integration

Relocation

GinsenInsurance andReal Estate

Unknown

FORMER/CURRENTLOCATION

NEW LOCATION

Nippon Building

Avex Building

ChiyodaMinatoVarious

NBF Shinagawa Tower

Various

MinatoCompany Owned Building

Tokiwabashi Tower

Chuo

ChiyodaHarumi Center Building

Kudan-Minami Itchome Project

Chuo

ChiyodaVarious

Shidome Building

Various

MinatoAPPROXIMATE SPACE
TSUBO

SQ M

8,600

28,3004,000

13,200

2,300

7,600

2,200

7,400

1,500

5,000

Source Nikkei RE, Savills Research & Consultancy

savills.co.jp/insight-and-opinion/

4

Office Leasing

potential tenants are willing to pay. Additionally,
the ward has the smallest overall stock in the C5W,
which has helped it maintain the lowest vacancy in
the C5W amidst the pandemic.
That said, performances in Shibuya varydepending on location, and a closer analysis
reveals that Shibuya’s overall resiliency is greatly
supported by the area around Shibuya station.
In this area, rental corrections to suitable pricepoints have helped decrease vacancy. Furthermore,
although its vacancy is higher than pre-pandemic
levels, the Yoyogi & Sendagaya submarket has also
managed to maintain low levels of vacancy. As
the most affordable rental level in the ward withproximity to major stations, the submarket has astable tenant base.
Elsewhere, the Ebisu & Hiroo submarket took
the hardest hit from the pandemic and continues
to be the primary cause for the rental correctionsin the ward overall. Accessibility in the submarket

is unideal, and its stock is older compared to therest of Shibuya. Indeed, the trend seen in theoverall Tokyo market also holds true for Shibuya– buildings that are newer and closer to stations
look to remain stable, while those further away
and older have continued to deteriorate, thus
bringing down the market.
Rents for Grade A buildings in Ebisu & Hiroo
have declined 16.0% since the pandemic began
in Q1/2020. In comparison, the area around
Shibuya station contracted 11.7%, and the
Yoyogi & Sendagaya submarket saw the smallest
contraction of 6.0%. Yoyogi & Sendagaya should
remain stable in the short-term and hopefully
recover in the mid-term when developments cometo the market and help revitalise the area.
Looking forward, the supply situation aroundthe vicinity of Shibuya station appears stable.
After a quiet supply year in 2022, 2023 and 2024
will introduce supply that will play to the area’s

strengths. Specifically, the next largest supply,
Sakuragaoka Redevelopment, will introduce
over 55,000 tsubo GFA directly next to Shibuya
station. Other buildings such as the Dogenzaka
2-chome project and Shibuya 2-chome 17 district
projects opening up close to Shibuya station
should also make the area more attractive.
Indeed, although the hybrid work model has
become more popular, high-grade offices withgood accessibility should remain popular.
Overall, Shibuya remains an ideal location
for prospective tenants to set up a main central
office given its high-specifications, large floor
plate buildings, and improved accessibility.
Although navigating in and around the station
was complicated before, various renovations havebeen improving the walkability and ease of access,particularly for the new buildings surrounding
the station that were built in recent years.

TABLE 5: Comparison of Shibuya’s Various Submarkets’ Grade A Performance During the Pandemic

RENT JPY/TSUBO
Q1/2020 Q4/2021

VACANCYCHANGE FROM
PRE-PANDEMIC
LEVELS

Q1/2020

Q4/2021

CHANGE FROM
PRE-PANDEMIC
LEVELSAVERAGEAVERAGEAVERAGEDISTANCE
FREE RENTYEAR OFFROM STATIONPERIOD
CONSTRUCTION
BY WALKING(MONTHS)OF GRADE A(MINUTES)

Ebisu & Hiroo

36,30030,500-16.0%

0.0%

4.5%

4.5ppts

4.8

4.5

1997

Shibuya Station Vicinity

45,20039,900-11.7%

0.4%

0.0%-0.4ppts

3.0

0.8

2010

Yoyogi & Sendagaya

34,80032,700

-6.0%

0.0%

2.7%

2.7ppts

3.6

2.1

2003

Source Savills Research & Consultancy*In each submarket within the table, only buildings located in Shibuya are included.

MAP 1: Average Rents Per Tsubo In Selected Submarkets, Q4/2021

¥30.9

¥29.1
¥31.6

¥45.8
¥35.6

¥31.6

¥23.4

¥35.6
¥28.8

¥37.4

Source Savills Research & Consultancy
Grade A Office, average passing rent + CAM per tsubo per month in thousand JPY. Coloured areas for illustrative purposes only.

savills.co.jp/insight-and-opinion/

5

Office Leasing

OUTLOOK
With business and consumer confidence gradually
increasing through 2021, there were hopes thatthe economy would recover in earnest, and thatthe office sector would improve and bottom out
in early 2022. Indeed, the pandemic appeared
manageable with the high vaccination rates andplummeting cases of COVID-19 in the country.
Unfortunately, the Omicron variant has clouded
this optimism and delayed the recovery by at leasta few months.
Despite the ebbs and flows of the pandemic, theoffice remains an important part of the workplace,and large-scale cancellations have been limited
thus far. For instance, as demonstrated by a seriesof Xymax surveys in December, more than halfof workers go to the office at least twice a week asof September, highlighting the improbability offull teleworking arrangements. Furthermore, aslong as the pandemic remains manageable, mostcompanies of all sizes intend to increase theirin-office attendance, and over three quarters ofworkers reportedly would like to go to the officeat least one day per week. In fact, in other cities
beyond Tokyo, many workers have already begun
to fully return to the workplace, even in the second
largest city, Osaka.
One trend observed in recent office movements
is that companies are shifting their office layouts to
support a hybrid model rather than returning officespace. This hybrid model should be applicable
to most industries, albeit at different scales.
Industries such as IT are more likely to implement
remote work arrangements, while industries suchas construction and finance prefer greater officeattendance and have stronger intentions to returnto the office. The size of companies should also
affect remote working practices – large companies
are more likely to continue this practice thansmaller companies, especially from a company-

benefit point of view.
Overall, even though concerns over new variants
are prevalent, more people are expected to returnto the office as long as the pandemic situation
remains manageable. Therefore, the recovery
of office markets is still expected in 2022. With
corporate profits nearing pre-pandemic levels,
business sentiments have improved in 2021.
Specifically, year-to-date corporate profits in
Q3/2021 are 50% higher than what was seen overthe same period in 2020 and are only 3% lower
than the same period in 2019. However, even in a
post-pandemic world, there will be many people
who will not commute to the office daily, and officedemand will thus remain subdued. Furthermore,
the Omicron variant may delay economic recovery
or instill greater caution about returning to theoffice. That said, the high vaccination rates andconservative attitudes should help to maintainstability in the office sector going forward.

Savills monitors rents and vacancy levels at more than 500 buildings located in Tokyo’s central five wards with a GFA of 3,000 tsubo (10,000 sq m) or above.
Unlike similar market information issued by other research institutions, the rental data provided relates to estimated passing rents, inclusive of common area
management fees, as opposed to asking rents. Meanwhile, vacancy figures reflect current vacant space without the inclusion of ‘expected’ vacancy, or thatreported prior to tenants vacating their premises. As a result, benchmark figures, particularly vacancy rates, tend to be lower than other market indices.
savills.co.jp/insight-and-opinion/

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